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Before investing in fixed income, you need to understand how this market works. This is the best way to get good results. In this sense, the first step is to answer which type of fixed income investment is best. Check it out below. 

What is the best type of fixed income investment?

Fixed Income is the recommended investment for investors looking for security and stability in the market. Before becoming a shareholder, investors need to answer the following question: what is the best type of fixed income investment?

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This is the type of investment for those who don't have an emergency reserve. The reason it is called Fixed Income is precisely because investors can guarantee a return, which is set at the time of investment. 

The amounts can be fixed at a monthly rate or follow an index, such as the Selic Rate, inflation, among others. One of the most commonly used indices in Fixed Income investments is the CDI, with investments yielding up to 130%.

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It's worth noting that some assets are indexed to the Selic rate, which is currently at 13.75% for the year. These figures are for October 2022. This means that market yields are also on the rise. 

Just like other investments, this category has a variety of risks and objectives. In short, before you start investing in fixed income, it's essential to learn about the market. 

What are the main fixed income investments?

Before discovering the returns that fixed income can offer investors, we need to find out about the main investments in this type of investment. Most assets work in the same way, i.e. the return is set at the time of purchase. 

1. CDB

CDBs, which stand for Certificates of Bank Deposits, are similar to Treasury Direct securities. However, unlike the other model, these are issued by financial institutions / banks. 

When an investor invests in a CDB bond, he is lending money to the bank. In return for this investment, they will receive their money back on the maturity date, plus interest. 

It's worth noting that the yield on these bonds follows the DI rate. In short, the values are variable, but are defined at the time the operation is finalized by the investor.

2. Treasury Direct

Treasury Direct securities are also fixed income. These models were created as a way of raising funds by the Federal Government, which uses the amounts to provide financing. 

When an investor buys a Treasury Direct bond, they are basically lending money to the government. The return will depend on the level of interest and inflation. 

3. Fixed Income Fund

Another variation of fixed income investments are market funds. These securities work like investor condominiums, where each shareholder owns a fraction of the assets.

The managers of these funds invest the funds in a portfolio of fixed income products. In this way, investors can achieve the best return in relation to the CDI rate. 

What are the differences between fixed and variable income?

Variable income, as its name suggests, is an investment with unstable returns. In this sense, when investors invest in the market, they don't know how much they will receive in the future.

Unlike variable annuities, fixed annuities determine what the yield will be at the time of the transaction. Another characteristic is that these products are less risky than variable annuity models. 

Variable income investments follow the Ibovespa index, the main stock market index. Now that you understand the difference, check out the main products of this type of income: shares, real estate funds, equity funds, among others. 

How to choose and invest in fixed income securities

Before investing in fixed income securities, shareholders need to understand the current economic scenario. After all, this characteristic directly interferes with profitability, as well as the results of the operation. 

Investing in diversified fixed income securities is simple: shareholders just need to open an account with a financial institution. Once they find one that suits their needs, investors have access to products and financial objectives in the palm of their hands. 

Then, to start investing in the market, investors need to make the initial TED. Through your financial institution's advanced system, you can make responsible asset choices. 

What are the advantages and disadvantages of fixed income?

Fixed income is the best choice for those who want to build up an emergency or opportunity reserve. 

In both cases, the securities must be highly liquid for shareholders. In addition, withdrawals must be made quickly. 

Finally, to understand more about Fixed Income, it's worth getting to know its main advantages. Check them out below:

  • Security and Predictability: Fixed Income has a predefined value. In other words, when shareholders invest in bonds with this characteristic, they already know the amount they will receive. This makes it safer and more predictable;
  • Diversity of Products: One of the characteristics of Fixed Income is the diversity of products available for investment. Among the main ones are government bonds, such as Tesouro Direto, LCA, CRI, among others; 
  • Tax exemption: Among the advantages of fixed income, some of the products are exempt from income tax. This gives investors a higher return;
  • Ease: Another advantage of investing in fixed income products is the ease with which trading can take place. The entire procedure can be carried out over the internet, as long as the financial institution allows it; 
  • Affordability: Last but not least, fixed income products are known for their affordability. This means that in some cases, the deposit is usually low, with options of less than R $100.00. 

Finally, as well as advantages, fixed income has disadvantages: 

  • Deadline: In some cases, early redemption is not possible and the deadline set at the time of the operation must be met; 
  • Fees: Investors need to pay some amounts when investing in Fixed Income products, such as management fees, custody fees, among others. 
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